Module 5. Introduction to Options Trading (Video Series)
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We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.

Key takeaways from this chapter

  1. Financial derivatives are called Financial derivatives because of their dependence on calculus and differential equations (generally called Derivatives)
  2. Delta of an option is a variable and changes for every change in the underlying and premium
  3. Gamma captures the rate of change of delta, it helps us get an answer to a question such as “What is the expected value of delta for a given change in underlying”
  4. Delta is the 1st order derivative of premium
  5. Gamma is the 2nd order derivative of premium
  6. Gamma measures the rate of change of delta.
  7. Gamma is always a positive number for both Calls and Puts.
  8. Large Gamma can translate to large gamma risk (directional risk)

13 comments

  1. Dilip says:
    May 16, 2022 at 4:00 pm

    Hi Karthik,
    I can’t see the theta module video after watching the gamma video.

    Reply
  2. Kiran Kondaiah says:
    May 21, 2022 at 1:09 pm

    Hi Karthik, These videos gave me confidence and clarity to start investing in the stock market. Thank you very much for sharing these; looking forward for all the other modules…

    Any idea by when we will have the videos for all the other modules? Just to make sure I wait for them, if it is not taking long, rather than learning else where…

    Once again, thanks – Kiran Kondaiah

    Reply
    • Karthik Rangappa says:
      May 22, 2022 at 9:56 am

      Hey Kiran, so we wont be making videos for other modules. Vidoes are only for the Basisc, TA, FA, Futures, and OPtions. However, we will start making videos on several market topics and post them on regular basis.

      Reply
  3. Sujeet says:
    June 20, 2022 at 12:12 pm

    Does we get the paid permium back in profit or in rise in permium?

    Reply
  4. Nikhil says:
    June 27, 2022 at 4:44 pm

    Hi Sir
    Why and how did you take 0.0006 as Gamma? Pls explain.

    Reply
  5. Yash Sarde says:
    May 23, 2023 at 10:07 pm

    What is the Calculate of this value (0.0006)

    Reply
  6. HS says:
    July 8, 2023 at 10:30 am

    The caption in the video at 3:12 should be change in delta instead of New Gamma.

    Reply
  7. Chandni Lakhpatiani says:
    October 25, 2023 at 3:38 pm

    In the chapter, New Delta= Old delta + New Gamma
    But in the video, New Delta= Old Delta – New Gamma???

    Reply
    • Karthik Rangappa says:
      October 26, 2023 at 10:08 am

      If the underlying is moving against, then the delta declines. But let me check this again to see the context under which this is stated.

      Reply
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